Business travellers tighten their belts

Date: 15 May 2009

BUSINESS TRAVELLERS TIGHTEN THEIR BELTS

- Air travel for business purposes at UK airports has grown by 20 million passengers to 63 million between 1996 and 2007 – but declined in 2008
- No-frills carriers have seen their share of the short-haul business passenger market increase from three per cent in 1996 to around 30 per cent in 2007
- Business passengers are increasingly travelling economy class on short-haul flights
- On long-haul flights business passengers are trading down to Premium Economy Class
- After four years of high growth, the use of executive jets has declined by over 20 per cent in the last quarter of 2008 compared with the same period in 2007*

Business travellers are seeking cheaper alternatives to First and Business Class travel according to a detailed study published today by the Civil Aviation Authority (CAA). This cost cutting trend has occurred during a rise in business travel between 1996 and 2007. However, the current recession has seen UK international scheduled business travel at the major London airports falling by six per cent in 2008 compared with 2007.

Different sectors of business travel (short-haul, long-haul and domestic) have evolved in different ways. Short-haul international business passengers saw the biggest increase, rising from 19 million in 1996 to 29 million in 2007. No-frills airlines have been very successful in capturing a share of the short-haul market for international business travel. They have seen a 10 fold increase in their market share from three per cent in 1996 to 30 per cent in 2007.

The number of domestic and short-haul business travellers has either fallen or remained largely static at Heathrow, because of the success of other London airports in gaining a share in the domestic and short-haul business markets. Another factor has been lack of capacity at Heathrow causing these services to be displaced to make room for longer-haul flights. However, Heathrow has captured virtually all the growth in long-haul business passengers at London airports. This also reflects British Airways’ decision to move many of its long-haul flights from Gatwick to Heathrow.

Domestic business traffic at UK airports grew from 15 million passengers in 1996 to 19 million in 2007, with London remaining the main destination.

The way business passengers travel has also changed with around 70 per cent of long-haul and 90 per cent of short-haul business passengers travelling Economy Class in 2007 compared with 66 per cent for long-haul and 60 per cent for short-haul in 1996.

However, due to the overall increase in business travel, absolute numbers in long-haul premium classes still increased from 1.8 million in 1996 to 3.5 million in 2007. During this time, the proportion of passengers travelling First or Business Class declined by 11 per cent to 23 per cent, while those opting for Premium Economy increased to nine per cent.

For short-haul destinations, business passengers travelling in premium classes fell from 5 million in 1996 to 2.3 million in 2007. The number of business passengers travelling economy class increased from 7.6 million to 22.8 million.

Commenting on the report the CAA’s Group Director of Economic Regulation, Harry Bush, said: “The growth of no-frills travel has had a major impact on the business travel market, with nearly a third of business travellers choosing to travel on these carriers from a greater variety of airports. At the same time, many more business passengers using full service carriers are choosing the lower frills options of Economy or Premium Economy Class. The current recession is likely to see these longer term trends continue.”

The use of executive jets grew by 14 per cent per annum between 2003 and 2007, but has fallen by over 20 per cent in the last quarter of 2008 compared with the same period in 2007*. This reflects the on-demand nature of business aviation, with a decline in demand much more likely to result in an immediate decline in flights than for scheduled airlines.

For more media information contact Mark Wiltsher on 020 7453 6026 or Nic Stevenson on 020 7453 6024.

*(Source:Eurocontrol)

Notes to editors

1. The report, Business Air Travel: Traffic Trends and Characteristics May 2009, can be found here: http://www.caa.co.uk/default.aspx?catid=5&pagetype=90&pageid=10711

2. Volume and growth of scheduled business passengers between 1996 and 2007

3. Country destinations with most international business passengers and growth, 2007

4. Business passengers travelling in different cabin classes